ServiceBench, a provider of Web-based service management solutions, today announced the release of its new on-demand Extended Warranty Solution. The new product promises manufacturers the ability to better manage their extended service agreements and, in turn, maintain closer ties to customers; improve customer service and customer and brand loyalty; and increase revenue and profits.
Prior to the Extended Warranty Solution, customers had the option of purchasing the manufacturer's warranty along with the product at the point of sale. When that expired, problems were later directed to the retailer (e.g., Circuit City or Best Buy). In response, says ServiceBench Chief Executive Officer Michael Dering, ServiceBench is providing manufacturers with the opportunity to reach out to an underserved market--those who want to extend their warranties after the point of sale. Since it does not interfere with the sales process, Dering claims that they will not be competing with the retailers, but merely providing an add-on. However, according to Micky Long, research director of strategic service management at Aberdeen, "this remains to be seen."
The Extended Warranty Solution (EWS) also addresses the disorganization of product warranties, Dering says. The process was "loosely knit" as information was located in different databases within the organization or, as Dering says was most often the case, paper-based. Now, ServiceBench offers manufacturers the ability to centralize their data and allow the entire organization to access the database by simply logging on. This capability relies on what Dering calls the EWS's distinguishing feature: an analytic, business intelligence software platform built on top of its own platform.
Long agrees that the key to ServiceBench's success is the fact that the company has made the whole application turnkey. "They're making it easier for a manufacturer to engage in it and they're taking a lot of the execution issues off of what the manufacturer would have to do on their own."
By improving the internal organization of managing warranties, this solution "does build a longer-term affinity between the manufacturer and the end consumer," Long says. By offering the extended warranty, manufacturers will be able to extend the average lifespan of their relationship with the customer from one year to perhaps as much as seven years. During this time, customers will have the comfort of knowing their products are covered under warranty; manufacturers, in turn, will have more touch points with the customer, and thus find opportunities to resell, upsell, and cross-sell.

As a result, manufacturers can not only fortify customer relationships, but they can also attack what Long reports is a primary warranty-management problem: delivering on root-cause analysis. With an extended warranty, manufacturers can follow their products for a longer period of time after the product has been purchased. "[Manufacturers] can see how [their] product is actually performing and how the parts are performing over a longer timeframe," Long says. He adds that such monitoring "gives them a lot more information and a lot more data to help them manage warranties and product management efforts, as well."
Currently, there is a common perception that extended warranties are "expensive propositions that don't necessarily pay off what they deliver," Long says. However, he believes that as products--especially those involving technology--get more complex, there will be a higher demand for extended warranties as repair services become increasingly more expensive. Although Long recognizes that there are no other competitive players in this market, he says that ServiceBench's major challenge is being able to execute its already-established plan.
Dering says that most companies are not used to selling extended warranties, partly because they never had an organized system in place to manage this service. However, he suggests that offering the EWS is only a natural progression from what they've already been up to: "We're already doing the dispatching of service providers, managing the service network inside the warranty period, [so] why don't we just extend [our services] to an extended warranty period?"
With a strong existing consumer base, Long believes that ServiceBench will be able to make a strong case for the EWS. One factor, Long adds, is that manufacturers are now telling themselves that service has gone from being a " 'tactical cost' part of the equation to being a 'strategic opportunity' I can use in my organization to generate additional revenues."
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